December 22, 2003
By email email@example.com
Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549-0609
Re: Security Holder Director Nominations (SEC File No. S7-19-03)
Dear Mr. Katz:
We submit the following comments in response to the Commission's proposal to give security holder-nominated director candidates access to company proxy statements in certain circumstances, as outlined in Release 34-48626 dated October 14, 2003.
We urge the Commission not to adopt the proposed rules, or alternatively, to defer adoption of such rules until (a) other recent corporate governance initiatives can be fully implemented and their effectiveness can be fully assessed and (b) the potential unintended consequences of such rules can be fully explored and understood.
As a newly-public company, our Board, and our Nominating & Governance Committee, have spent a great deal of time considering and implementing our governance structure, the key elements of which are described at our governance site at www.accenture.com /governance. We fully supported the Sarbanes-Oxley Act of 2002 and the Commission various rule-making initiatives thereunder (indeed, our CFO and I voluntarily certified our financial statements in 2002 before being required to do so). We also fully support the new governance requirements of the NYSE listing standards and are implementing them (even though we could avail ourselves of an exception from the requirements for a majority of independent directors and the requirements related to composition of Board committees). We have also, in our proxy statement to be sent to our shareholders shortly, attempted to fully comply with the recently effective rules on "Disclosure Regarding Nominating Committee Functions and Communications Between Security Holders and Boards of Directors" (even though we are mailing before the effective date of the new rule).
We believe all of these important new laws and regulations should be given an opportunity to work as we believe they will before undertaking dramatic further changes, with significant potential risks of unintended consequences, as those proposed in Release 34-48626. The large number and complexity of the questions in the release are sure indicators of the critical nature of these issues and the risk of "getting it wrong", despite the best of intentions.
I would also note that we have open and frequent communication with our institutional shareholders, and we describe in our proxy statement and at our website, how any of our shareholders may suggest director candidates to our Nominating & Governance Committee. We do believe it is critical, however, that the Nominating & Governance Committee, now comprised of only independent directors, exercise the diligence and judgment needed to assure a board that has the mix of skills, experience, judgment, independence, reputation and diversity (on many different dimensions) that is in the best interests of the company, its shareholders and all its stakeholders.
We share many of the concerns articulated by other thoughtful commenters, but wanted to highlight some of most concern to us. Among the areas of greatest concern to us are:
Whether one accepts a "shareholder democracy" metaphor or not in thinking about these issues, it may be instructive to consider the current, grave financial difficulties of the State of California. One reason for the current situation is an unintended consequence of the direct access to the ballot through the initiative process a legislature whose hands were largely tied in addressing budget problems because so much spending is mandated by voter-approved initiatives and therefore outside the control of the legislature which is elected to represent the interests of all citizens. While the analogy is not perfect, we would also be concerned that an unintended consequence of the Commission's proposal here is a Nominating & Governance Committee and a full Board whose ability to perform its critical roles on behalf of the company and all shareholders would be undermined. Such a result would frankly un-do all that Sarbanes-Oxley, the NYSE listing standards and other important initiatives were designed to accomplish.
We appreciate the opportunity to share our concerns with the Commission and stand ready to elaborate on any of them or discuss them further.
Very truly yours,
/s/ Joe W. Forehand
Joe W. Forehand
Chairman and CEO